change. What would happen to the company's profit if the changes were implemented, and production decreased to 45,000 units?
Q: The manager of Coowie, Inc. is considering raising its current price of $30 per unit by 10%. If she…
A: Break even point in units = Fixed costs / Contribution margin per unit Where,…
Q: d) Calculate the margin of safety in units and in sales dollars. e) The President of Benoit is…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Totally Tanked, Inc. sells tank tops. The firm is considering making some changes in order to…
A: Target profit is the profit that the company wishes to obtain by changing certain variables like…
Q: Assume a company is considering adding a new product. The expected cost and revenue data for this…
A: Contribution margin per unit = Selling price - Variable Cost
Q: Last year Minden Company Introduced a new product and sold 25100 units of It at a price of $95 per…
A: Note: Since we only answer up to 3 sub parts, first three subparts will be answered. Please resubmit…
Q: Manor Homes plans to discontinue a segment which last year generated a contribution margin of…
A: The fixed cost which is not avoidable is the costs that are incurred even if the segment is…
Q: how can the changes below affect Mirabel’s overall cost structure. For those changes that are…
A: Break even point refers to that volume of operation where, there is no profit or loss to an…
Q: XYZ company is studying the profitability of a change in operation and has gathered the following…
A: We would compare profit under both situation
Q: If a firm is able to sustain the same level of operations in terms of sales and administrative…
A: If a firm is able to sustain the same level of operations in terms of sales and administrative…
Q: Company XYZ is currently operating with a 65% contribution margin. The company is planning an…
A: Increase in contribution=Increased sale×Contribution margin=$10,000×65%=$6,500
Q: Company XYZ is currently operating with a 60% contribution margin. The company is planning an…
A: Profit = Sales - Variable Cost - Fixed Cost
Q: Zeal Corporation is thinking about the dropping of its product Z.Sales of the product total…
A: Formula: Net profit = Revenues - expenses Deduction of expenses from revenues derives the net…
Q: Although Allen Company has not reported a profit in five years, the company is improving. This year…
A: As the questions asked have more than 1 question, the first question is answered. If you want the…
Q: The President of Buggs-Off is under pressure from shareholders to increase operating income by 20%…
A: The question is based on the concept of Cost Accounting.
Q: Zeal Corporation is thinking about the dropping of its product Z. Sales of the product total…
A: Calculate the net profit/loss when Product Z is continued: Particulars Amount ($) Sales…
Q: XYZ Company is facing changes in its cost structure so that fixed costs will increase from $400,000…
A: Cost that changes irrespective of production level are called fixed costs whereas costs that changes…
Q: Company XYZ is currently operating with a 60% contribution margin. The company is planning an…
A: Net profit is calculated by deducting fixed costs from the contribution margin amount
Q: Last year, variable expenses were 60% of total sales and fixed expenses were 10% of total sales, If…
A: Contribution Margin It represents the excess of sales over its variable cost. It judges whether…
Q: (Using degree of operating leverage) Last year Baker-Huggy Inc. had fixed costs of $120,000 and net…
A: Degree of Operating Leverage(DOL) shows relationship between Net Operating Income(NOI) and Turnover…
Q: If the company wants to earn a profit of $35,000 instead of breaking even, what is the amount of…
A: The question is based on the concept of Financial analysis.
Q: Swann Systems is forecasting the following income statement for the upcoming year:Sales…
A: "Hey, since there are multiple questions posted, we will answer the first question. If you want any…
Q: Company produces and sells X and Y. In 2020, 10,000 units of X were sold at P10 per unit with…
A: Contribution margin = Sales - Variable cost Profit/loss = Contribution margin - Fixed Cost Case 1…
Q: h of the following changes to a company's contribution income statement will always lower the…
A: It is computed by the formula Sales-variable cost= contribution. As can be seen, by the formula…
Q: Marquette Manufacturing produces "invisible" electric dog fences, sold through retail locations…
A: Variable costs are the costs which changes with the variation in output and vice versa to this,…
Q: Your Company plans to discontinue a department that has a contribution margin of $22,000 and $50,000…
A: Avoidable fixed costs = fixed costs x (100%-42%) = $50,000 x 58% = $29,000
Q: A study has been conducted to determine if one of the departments in Your Company should be…
A: Calculate net loss from the department (division): Net loss=Contribution-Fixed…
Q: Company XYZ is currently operating with a 60% contribution margin. The company is planning an…
A: Contribution margin= Contribution/ Sales Contribution= Sales-Variable cost
Q: The selling price is $160 per unit. The contribution margin ratio is 70%. Fixed expenses are…
A: Net income = [(New selling price - variable cost) x revised units] - revised fixed cost
Q: Carrolton, Inc. currently sells widgets for $80 per unit. The variable cost is $30 per unit and…
A: we need to calculate the estimated revenue with the expected price and sales. For that use the…
Q: Last year Minden Company introduced a new product and sold 25,300 units of it at a price of $95 per…
A: Computation of net operating income/loss Sales - variable cost - fixed costs 25300 units * ($95 -…
Q: How much will operating income change if sales increase by 5,800 units?
A: Answer: Option b.
Q: A company increased the selling price for its product from P1.00 to P1.10 a unit when total fixed…
A: Break-even point(BEP) is a point where the entity doesn’t have any profit or any loss. Only the…
Q: Variable costs as a percentage of sales for Lemon Inc. are 79%, current sales are $653,000, and…
A: The contribution margin is the additional revenue made for each product or unit sold after the…
Q: Company XYZ is currently operating with a 60% contribution margin. The company is planning an…
A: Cost-Volume-Profit (CVP) Analysis: It is a method followed to analyze the relationship between the…
Q: Loessing Compan produced and sold 12,000 units last year with sales price of $45 per unit and unit…
A: Since all direct expenses have been deducted from sales, contribution seems to be the amount of…
Q: Company XYZ is currently operating with a 60% contribution margin. The company is planning an…
A: given that, Increase in sales = $15000 Contribution margin ratio = 60% Fixed cost increase by $2500…
Q: C) Going back to the original data, the team speculates that they might be able to achieve…
A: The latest income statement of Carolina Manufacturing company is given to us. The income statement…
Q: Variable costs as a percentage of sales for Lemon Inc. are 77%, current sales are $601,000, and…
A: CVP analysis is used as a decision-making tool that helps management to make strategies and take…
Q: What is the margin, turnover and ROI if the existing company performs the same next year AND it adds…
A: Ratio are the sub set, which is the group of metrics used for measuring the profitability as well as…
Q: Suppose a firm with a contribution margin ratio of 0.3 increased its advertising expensesby $10,000…
A: The contribution margin is calculated as difference between sales and variable costs. The net income…
Q: A Sales Revenues P100,000 (20,000) 80,000 P150,000 Variable Costs Contribution Margin (50,000)…
A: Keep or drop is the decision-making process where the decision regarding dropping a product or…
Q: Brody Inc. is currently selling a product at P20 per piece. The income statement for the current…
A: Income statement: The income statement shows the company's revenues and expenses earned during the…
Q: Requirements: What is the margin of safety as percentage and in unit? Assume that next…
A: Margin of Safety=Planned sales-Break- even sales Break-even sales=Fixed costs/Contribution margin…
Step by step
Solved in 2 steps with 2 images
- Marchete Company produces a single product. They have recently received the results of a market survey that indicates that they can increase the retail price of their product by 8% without losing customers or market share. All other costs will remain unchanged. Their most recent CVP analysis is shown. If they enact the 8% price increase, what will be their new break-even point in units and dollars?Boxer Production, Inc., is in the process of considering a flexible manufacturing system that will help the company react more swiftly to customer needs. The controller, Mick Morrell, estimated that the system will have a 10-year life and a required return of 10% with a net present value of negative $500,000. Nevertheless, he acknowledges that he did not quantify the potential sales increases that might result from this improvement on the issue of on-time delivery, because it was too difficult to quantify. If there is a general agreement that qualitative factors may offer an additional net cash flow of $150,000 per year, how should Boxer proceed with this Investment?A company has prepared the following statistics regarding its production and sales at different capacity levels. Total costs: 1. At what point is break-even reached in sales dollars? In units? (Hint: Use the capacity level to determine the number of units.) 2. If the company is operating at 60% capacity, should it accept an offer from a customer to buy 10,000 units at 3 per unit?
- Bethany Company has just completed the first month of producing a new product but has not yet shipped any of this product. The product incurred variable manufacturing costs of 5,000,000, fixed manufacturing costs of 2,000,000, variable marketing costs of 1,000,000, and fixed marketing costs of 3,000,000. Under the variable costing concept, the inventory value of the new product would be: a. 5,000,000. b. 6,000,000. c. 8,000,000. d. 11,000,000.Gelbart Company manufactures gas grills. Fixed costs amount to 16,335,000 per year. Variable costs per gas grill are 225, and the average price per gas grill is 600. Required: 1. How many gas grills must Gelbart Company sell to break even? 2. If Gelbart Company sells 46,775 gas grills in a year, what is the operating income? 3. If Gelbart Companys variable costs increase to 240 per grill while the price and fixed costs remain unchanged, what is the new break-even point?Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here.
- Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of 1,350 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of 900 per unit. a. If a transfer price of 1,000 per unit is established and 75,000 units of materials are transferred, with no reduction in the Components Divisions current sales, how much would Ziegler Inc.s total operating income increase? b. How much would the Instrument Divisions operating income increase? c. How much would the Components Divisions operating income increase?Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are 200,000 greater than expected. What would the total profit be? 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10 percent of sales? 6. Assume the income tax rate is 40 percent. How many units must be sold to earn an after-tax profit of 180,000?Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all 30,000 for $240 each. Country Enterprises has approached Dimitri to buy 800 chairs for $210 each. Dimitris normal variable cost is $165 per chair, including $50 per unit in direct labor per chair. Dimitri can produce the special order on an overtime shift, which means that direct labor would be paid overtime at 150% of the normal pay rate. The annual fixed costs will be unaffected by the special order and the contract will not disrupt any of Dimitris other operations. What will be the impact on profits of accepting the order?
- Danna Martin, president of Mays Electronics, was concerned about the end-of-the year marketing report that she had just received. According to Larry Savage, marketing manager, a price decrease for the coming year was again needed to maintain the companys annual sales volume of integrated circuit boards (CBs). This would make a bad situation worse. The current selling price of 18 per unit was producing a 2-per-unit profithalf the customary 4-per-unit profit. Foreign competitors kept reducing their prices. To match the latest reduction would reduce the price from 18 to 14. This would put the price below the cost to produce and sell it. How could these firms sell for such a low price? Determined to find out if there were problems with the companys operations, Danna decided to hire a consultant to evaluate the way in which the CBs were produced and sold. After two weeks, the consultant had identified the following activities and costs: The consultant indicated that some preliminary activity analysis shows that per-unit costs can be reduced by at least 7. Since the marketing manager had indicated that the market share (sales volume) for the boards could be increased by 50% if the price could be reduced to 12, Danna became quite excited. Required: 1. CONCEPTUAL CONNECTION What is activity-based management? What phases of activity analysis did the consultant provide? What else remains to be done? 2. CONCEPTUAL CONNECTION Identify as many nonvalue-added costs as possible. Compute the cost savings per unit that would be realized if these costs were eliminated. Was the consultant correct in the preliminary cost reduction assessment? Discuss actions that the company can take to reduce or eliminate the nonvalue-added activities. 3. Compute the unit cost required to maintain current market share, while earning a profit of 4 per unit. Now compute the unit cost required to expand sales by 50%, assuming a per-unit profit of 4. How much cost reduction would be required to achieve each unit cost? 4. Assume that further activity analysis revealed the following: switching to automated insertion would save 60,000 of engineering support and 90,000 of direct labor. Now, what is the total potential cost reduction per unit available from activity analysis? With these additional reductions, can Mays achieve the unit cost to maintain current sales? To increase it by 50%? What form of activity analysis is this: reduction, sharing, elimination, or selection? 5. CONCEPTUAL CONNECTION Calculate income based on current sales, prices, and costs. Then calculate the income by using a 14 price and a 12 price, assuming that the maximum cost reduction possible is achieved (including Requirement 4s reduction). What price should be selected?Suppose that a company is spending 60,000 per year for inspecting, 30,000 for purchasing, and 40,000 for reworking products. A good estimate of nonvalue-added costs would be a. 70,000. b. 130,000. c. 40,000. d. 90,000. e. 100,000.Wellington, Inc., reports the following contribution margin income statement for the month of May. The company has the opportunity to purchase new machinery that will reduce its variable cost per unit by $10 but will increase fixed costs by 20%. Prepare a projected contribution margin income statement for Wellington, Inc., assuming it purchases the new equipment. Assume sales level remains unchanged.